Hi,
Why don't you develop an action called 'Conversion - Reg' or something in T529A where C2H employee will be regularised. So, when the action is executed, it triggers the position and you can enter the same position but a different employee ID will generated as per the number range set (external or internal).
You will have new records with new start date as all the old records will be delimited. So, you can use them for reporting as well.
Also you can set the position as vacant once he moves from contract to regular and similarly you can set the regular pay etc in IT0008/ IT 0015 in the action which ever is applicable.
Thanks
Madhav.